KAMPALA: The Ugandan shilling firmed on Wednesday, lifted by inflows of hard currency from charities and traders forecast further gains due to a liquidity mop-up by the central bank and coffee export earnings.
At 0915 GMT commercial banks quoted the shilling at 2,755/2,765, stronger than Tuesday's close of 2,760/2,770.
"Inflows from NGOs (non-governmental organisations) are coming in while dollar demand from corporates is sluggish," said Faisal Bukenya, head of market making at Barclays Bank.
Bukenya said the local currency could be buoyed after a repurchase agreement (repo) by the central bank that was expected later in the day.
The central bank was due to carry out the repo after releasing results for a Treasury bond auction in which debt notes of 2 and 15-year tenors were up for sale.
By absorbing excess liquidity, the bank makes it relatively more expensive to hold long dollar positions, which partly lends support to the shilling.
On Monday it removed a total of 392 billion shillings ($142.03 million) from the market.
Shahzad Kamaluddin, a trader at Crane Bank, said he expected some healthy greenback supplies from coffee exporters.
"These inflows will be coming in when demand is low and we have these frequent mop-ups... all indicators point to a stronger shilling," he said.
So far this year the shilling is 8.5 percent weaker against the dollar, driven lower largely by demand for dollars from importers and foreign-owned companies paying dividends abroad.
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